The waiting game is about to become expensive

If you are a first-time home buyer interested in securing what is essentially free money for you - although not taxpayers as a whole - the deadline is April 30 to get a home into escrow.

That’s the last day to take advantage of the $8,000 federal tax credit. That home, though, must close escrow by June 30.

That tax credit is reducing the cost of purchasing homes to the point you can buy some houses in Manteca for less than they sold for new in 1991.

One example is 476 Mission Ridge Drive with 1,139 square feet including three bedrooms and two bathrooms that closed escrow March 8. The buyer - if it was a first-time homeowner and not an investor - secured a selling price of $135,000. The tax credit would kick it down to $127,000 or $1,500 less than what it sold for new. The monthly payment with an FHA loan - factoring in 3.5 percent down and not applying the tax credit to the purchase price - is just over $1,000 a month or actually less than it costs to rent a similar home.

If you have tracked the Manteca market week-to-week you will have noticed the overall median sales prices have dropped to $170,000. That is $4,000 less than last year’s average. That can be a little deceiving. The absolute bottom isn’t dropping. Homes in the $150,000 plus range have been. While it has increased affordability for many it hasn’t for those who have the most to lose by waiting too long - buyers who need homes $120,000 and under.

First, if people feel they are stable in terms of finances they really need to explore buying if they are renting especially if they have no intention of packing up everyone and moving to Beverly Hills. Any time soon you can still buy for either less or about the same as you can rent. That is an aberration in any part of California that is even halfway desirable to live in.

Second, most people who have credit issues can get them cleaned up fairly quickly in most cases. But it still can take two to five months. While it seems there is plenty of time to drag your feet even after the $8,000 tax credit goes away, there really isn’t.

Some people are also half expecting Congress to extend the credit again.

Whether they do or don’t there is a wild card that was laid on the table this month that once it is turned over will mean - by government estimates - that at least 350,000 less families will be able to buy homes each year.

That wildcard is an increase in the down payment requirement that the government has indicated may soon accompany FHA loans. Why is that important? Unless you have stellar credit, and the means you will be among the roughly eight in 10 home buyers who have to get a FHA secured loan.

On a $120,000 house a 3.5 percent down payment means $4,200 plus whatever closing costs may be needed. If that increases to 5 percent the amount jumps to $6,000 plus closing costs.

It doesn’t sound like a lot but for many households that may try to take advantage of monthly mortgage payments being the rough equivalent of rent payments.

People weighing whether to wait often dismiss tax advantages in the initial years of buying a home as well as the most important factor of all - stabilizing housing costs.

Unless you encumber the house with additional loans, your mortgage payment will be constant for 30 years. And, unlike if you are renting, it will go away after that.

So the prices may drop a few more thousand dollars in the middle price range before things start getting back to some sense of normalcy. Is it worth the wait?

Not if you are one of the people who might get knocked out because of increased down payment requirements or the real 900-pound gorilla that is lurking out there - higher interest rates. A one percent jump in rates on a $120,000 loan increases the monthly mortgage payment on a house by almost $75.